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Compaq files recruitment lawsuit against RLX

The PC giant files a suit alleging that RLX violated Compaq Computer's trade secrets by recruiting key executives, including a number of vice presidents.

Compaq Computer has filed a lawsuit against RLX Technologies, a server start-up run by a number of former Compaq executives.

The lawsuit, filed in the District Court of Harris County in Texas, alleges that RLX violated Compaq's trade secrets by recruiting key Compaq executives, including one-time vice presidents Mike Perez and Keith McAuliffe. These former Compaq employees, the suit alleges, then improperly divulged confidential Compaq intellectual property.

Houston-based Compaq filed the suit Wednesday. The court issued a temporary restraining order Friday that prevents RLX from recruiting more Compaq employees for a week, according to The Woodlands, Texas-based RLX.

Both companies are preparing to release power-efficient, "ultradense" servers later this year. These new types of servers will be less than an inch thick and consume less energy than standard servers. These two characteristics will permit e-commerce sites and Web hosting companies to stuff more computing power into a finite amount of space.

Compaq could not be reached for comment. Kevin Bohren, RLX's vice president of business development, called the suit groundless.

"We believe the suit has no merit," he said. "We believe this is a move to de-focus our management team."

Bohren, who was previously a Compaq vice president himself, added that the suit was filed hours after RLX announced that it had received $40 million in a second round of funding from, among others, IBM and Soros Private Equity Partners.

Intellectual property suits based on employee recruiting are a staple of the high-tech industry, but often difficult to win. Courts, as a matter of public policy, generally uphold the employee's right to switch jobs. Roving employees, however, are not allowed to breach nondisclosure agreements.

The companies aren't strangers to each other, as a number of former Compaq executives hold key management positions at RLX. Gary Stimac, RLX's chief executive, was one of the original Compaq executives. Perez, RLX's vice president of technology, used to run Compaq's server division.